AFR: Financial CHOICE Act Contains Terrible Ideas Pushed By Wall Street lobbyists

AFR Statement On Financial CHOICE Act

The House Financial Services Committee is preparing to mark up Chairman Jeb Hensarling’s Financial CHOICE Act. This bill includes many of the worst legislative ideas put forward by Wall Street lobbyists and their friends since the financial crisis of 2008. To begin with, it would make structural changes to the Consumer Financial Protection Bureau and its mandate that would take a wrecking ball to the agency’s effectiveness. The bill also takes aim at specific and important CFPB actions to protect the public from abuses by Wall Street banks and by predatory lenders, including rulemakings to rein in the abuses of payday and car-title lenders and curtail the financial industry’s use of forced arbitration clauses that strip consumers of their right to band together against systematic wrongdoing.

Chairman Hensarling’s proposal would also block the implementation of new Department of Labor rules to protect retirement savers against conflicted investment “advice” that costs American families some $17 billion a year; override a Dodd-Frank provision limiting the ability of the big banks and credit-card giants to over-charge merchants on card transactions; repeal the Volcker rule, a key provision of Dodd Frank that tells banks they can’t make risky bets for their own profit with depositor funds; and destroy the effectiveness of the new Financial Stability Oversight Council by cutting its funding, eliminating its authority over shadow banks, and more than doubling the number of its voting members.

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On top of everything else, the Financial CHOICE Act would require financial watchdog agencies to go through an impossible obstacle course of procedural hoops (for example, estimating all the “anticipated direct and indirect effects” of any proposed regulation), and require every significant new rule to gain the explicit advance approval of both houses of Congress. It is hard to imagine these regulators accomplishing much of anything under the battery of obstructions the Hensarling bill would establish.

In sum, the Financial CHOICE Act would be an unprecedented blow to effective oversight of the financial sector and to fairness for consumers, investors, members of the public, and businesses. This is not a serious piece of legislation. It is, however, a sad reminder of the Financial Services Committee’s apparent willingness, under its current leadership, to do Wall Street’s bidding with breathtaking disregard for the costs to consumers and to the safety of the financial system as a whole.

CHOICE Act opposition letters

CHOICE Act opposition letters from advocacy groups:

CHOICE Act opposition letters from business and retailer groups: